Hedge funds hold hefty long position in soy complex ahead of Wasde

Hedge funds ramped up their long position to the highest level in over two years last week, data from the Commodity Futures Trading Commission showed.

Speculators’ net longs in Chicago grains, May 5 (change on week)

Chicago wheat: -62,241, (-1,436)

Kansas wheat: -5,448, (-4,810)

Corn: 71,032, (-8,749)

Soybeans: 167,554, (+7,429)

Soyoil: 70,952, (-23,449)

Soymeal: 42,785 (+11,611)

Over the week to last Tuesday managed money, a proxy for speculators, increased the number of long bets, which gain when the market rises, faster than they ramped up short bets, which gain when the market falls.

The size of the managed money net-long position, the degree to which long bets outnumber short bets, reached a massive 167,554 lots.

This is the largest the net long position has been since April of 2014.

Large net long

Soybean prices finished last week only slightly below their levels as of Tuesday, although they have been falling on Monday’s trade.

This suggests that hedge funds are still holding onto a hefty net long position.

And soymeal futures are also looking heavily bought, with speculators more bullish on the commodity than at any point since August last year.

Speculators’ net longs in New York softs, May 5 (change on week)

Raw sugar: 173,788, (+18,780)

Cocoa: 44,541, (+6,231)

Cotton: 34,591, (+2,333)

Arabica coffee: -6,430, (-13,220)

Hedge funds raised their net long position in Chicago soymeal futures to 42,785 lots in the week to last Tuesday, after weeks of heavy buying.

Before the middle of last month, hedge funds had been net negative on the animal feed since November of last year.

Room for sell-off

This heavy buying leaves room for a rapid speculative selloff, if Tuesday’s Wasde report, a monthly supply and demand report on global ag markets from the US Department of Agriculture. proves less than supportive.

“The focus is now on the crop report tomorrow,” said US Commodities.

“Funds are huge longs in soybeans and soymeal and need a positive report or further drought concerns.”